Rural homes in limbo as land-rights debate rages

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Anarrow, gravel path leads to a two-storey villa in Beijing's eastern rural outskirts. The villa's iron railings are covered in vines, the garden is populated by shady plants and a dog wanders about unperturbed among the rocks and water features.

Inside, elegant, matching furniture is arranged in the spacious rooms according to the principles of fung shui. It is almost the perfect house but despite the comforts, newspaper editor Niu Xinwen, the villa's owner and occupant of 11 years, is worried.

Every day, Mr Niu surveys his pastoral idyll and asks the question that has haunted him since the township government sold him the house: when will the villa be pulled down?

China's land ownership system, which sets different rules for urban and rural land, does not allow city residents to buy residential property in rural districts, even though the practice is common in many parts of the country.

Therefore under mainland law, Mr Niu is not recognised as the villa's real owner, even though township authorities and the village head signed off on the deal, with a so-called 'minor property right' - a kind of land right obtainable by rural residents.

Mr Niu does not have regular property ownership rights. According to the country's Land Administration Law and related judicial interpretations, urbanites are expressly forbidden from buying homes in the countryside and government agencies are not allowed to issue the land use certificates for homes illegally bought or built by city dwellers. But local governments, eager to ride on the boom resulting from the transition to a market economy, have expropriated collectively owned rural land to sell to developers for construction and development for their own gain.

The property rights debate underscores the central government's reluctance to loosen land ownership controls and to ensure adequate arable land for food production.

As housing prices have surged, people registered in urban centres have been flocking to rural areas over the past few years to take advantage of much lower residential property prices. Most homes in rural areas are 25 to 30 per cent cheaper than urban properties because developers do not have to pay land-use rights fees. The strong demand for affordable housing has fuelled illegal developments.

Property prices in major mainland cities have surged in recent years. Prices in Beijing, buoyed by Olympic fever, rose from an average 4,700 yuan (HK$5,376) per square metre in 2001 to 12,000 yuan last year, Xinhua reported last week. Prices in northern Beijing, near the Olympic venues, jumped from 6,000 yuan to 20,000 to 30,000 yuan.

Analysts expect the heat will fizzle out now the Games are over, even though across the city and the nation, rapid urbanisation continues. According to the National Development and Reform Commission, prices in 70 large- and medium-sized cities gained 7 per cent in July from a year earlier, down from a rise of 8.2 per cent in June. In Beijing, price growth remained strong, 10.2 per cent higher than a year earlier.

Mr Niu was just one of the many people who started buying rural villas in the early 1990s. The prospect of an affordable life far from the madding crowd attracted the well-heeled and urban economic refugees alike.

A survey by leading mainland real estate website Soufun.com found that more than 60 per cent of respondents would consider relocating to the countryside because of the lower prices. 'I only paid 300,000 yuan for the villa in 1997 but now it would be worth 6 million yuan at least if it had the property rights,' Mr Niu said.

The mainland is estimated to have had 5 billion square metres of property by the end of 2006 in the 'minor property right' category, equal to nearly 40 per cent of total urban residential space. Chinese press reports pointed out that most of the properties are in Beijing, Tianjin, Jinan and Zhengzhou.

The official Legal Daily recently reported that the Ministry of Land and Resources was accelerating efforts to register rural land use permits which authorities believe would help streamline rural land use and prevent expropriation. The State Council is also expected to issue new regulations soon making it clear once and for all whether any homes with 'minor property rights' or bought from township authorities are legal.

The issue is contentious. Property developers insist the rural deals erode their market share but city residents say outrageous urban housing prices have put accommodation out of their reach.

Earlier this year, the government's stand on the legality of the homes was firm - urban residents were not able to buy homes in the countryside. But that early toughness has given way to a late compromise and confusing, mixed messages.

Zhang Xinbao, supervisory division director at the Ministry of Land and Resources, was quoted as saying in July that a status report with suggested solutions had been presented to the State Council, after a thorough clearing-up and investigation into minor property right houses across the country.

An industry source said the ministry proposed an unequivocal prohibition on new approvals, orders to local authorities to protect existing developments, and ways for property developers to benefit if the ban was eventually lifted.

A property analyst said uncertified homes were so numerous that the government was concerned about a political backlash that could result from a tough clampdown. In many cases, the courts have rescinded deals done by local governments. For example, in Songzhuang, an artists' village on the eastern fringes of Beijing, some painters have lost properties they bought a few years ago.

China University of Political Science and Law professor Zhao Hongmei said the untitled houses were the product of demand, so it was no use trying to tackle the issue by stopping sales.

However, Central Party School deputy director Zhou Tianyong argued that the houses were legal and that it was illegal to demolish them under constitutional law.

The State Council's much anticipated regulation has still not been released, worrying lower-level governments, homeowners and property developers.

But when they do arrive, the new rules may be good news for Mr Niu - if the regulation upholds his ownership of the property, he and his dog will be able to continue to enjoy the wide open spaces of rural life.